70.2K

Verified Solution

Link Copied!

-/5 Current Attempt in Progress Bramble Electronics manufactures two HD television models: the Royale, which sells for $1,316, and a new model, the Majestic, which sells for $1,034. The production costs calculated per unit under traditional costing for each model in 2022 were as follows: Traditional Costing Royale Majestic Direct materials $564 $298 Direct labour (S20 per hour) 100 80 Manufacturing overhead ($35 per direct labour hour) 175 Total per unit cost $839 $518 140 In 2022, Bramble manufactured 18,800 units of the Royale and 9,400 units of the Majestic. The overhead rate of $35 per direct labour hour was determined by dividing total estimated manufacturing overhead of 54.6 million by the total direct labour hours (131.600) for the two models. Under traditional costing the gross profit on the models was $477 for the Royale or ($1,316 - 5839), and $516 for the Majestic or ($1.034 - 5518). Because of this difference, management is considering phasing out the Royale model and increasing the production of the Majestic model Before finalizing its decision management asks Bramble's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2022: Before finalizing its decision, management asks Bramble's controller to prepare an analysis using activity-based costing (ABC). The controller accumulates the following information about overhead for the year ended December 31, 2022: Activity Cost Pools Purchasing Machine set-ups Machining Quality control Cost Drivers Number of orders Number of set-ups Machine hours Number of inspections Estimated Estimated Use Activity-Based Overhead of Cost Drivers Overhead Rate $705,000 23,500 $30 per order 564,000 18,800 $30 per set-up 2,914,000 94,000 $31 per hour 423,000 4,700 $90 per inspection The cost drivers used for each product were as follows: Majestic Royale 10,575 12.925 Cost Drivers Purchase orders Machine set-ups Machine hours Total 23,500 18,800 9,400 9.400 37,600 56,400 94,000 Inspections 2,115 2.585 4.700 Attempts: unlimited (b) What was the cost per unit and gross profit of each model using ABC costing? (Round answers to 2 decimal places, s. 15.25.) Royale Majestic Per unit cost Gross profit per unit $ eTextbook and Media Save for Later Attempts: unlimited Submit

Answer & Explanation Solved by verified expert

See Answer